Credit Unions are Fighting Employee Fraud Through Verafin’s Cloud-based Platform

Learn the risks of employee fraud and best practices to mitigate losses at an April 17 webinar.

4/9/2019

When employees abuse their position for personal gain, exploiting assets or confidential data to commit illicit activities, they are committing employee fraud. Such fraud constitutes an attack from within the company, by the very people entrusted to protect its assets. In a 2018 global study, the Association of Certified Fraud Examiners report that employee fraud, or occupational fraud, is likely the largest and most prevalent threat faced by organizations.

Credit unions can be especially vulnerable to employee fraud, as fraudsters within the organization have access to large amounts of personal identification information and financial transactional data, along with access to customer accounts.

Strategic Link partner, Verafin, helps credit unions fight financial crimes and comply with regulations. Their cloud-based platform leverages big data intelligence for fraud detection, anti-money laundering, and high-risk money management. Verafin’s solution significantly reduces false positive alerts, delivers context-rich insights, and streamlines compliance processes.

“Employee fraud is a piece of the risk management discussion that we wish we didn’t have to have. We want to believe that our team members are all here to do the right thing for the right reasons,” said Northwest Credit Union Association Director of Regulatory Affairs and Risk Management, Katie Clark. “Strong, effective internal controls play a role in helping to mitigate this risk by removing the ability for internal fraud to occur. While you cannot always remove motive, you can remove opportunity and decrease risk.”

Examples of employee fraud
Employees are intimately aware of financial service controls, and can circumvent regulations to commit fraud. Here are five tactics credit union employees may use to commit fraud:

  • Monitoring customer accounts for activity and skimming funds from less active accounts.
  • Reversing non-sufficient funds fees and transferring the refunded charges to their personal accounts.
  • Opening fraudulent accounts with stolen or fictitious information, collecting the employee sales rewards, and closing the accounts.
  • Manually modifying sales numbers to increase employee sales rewards.

Detecting and Monitoring Internal Threats
In order to protect themselves from evolving external threats, credit unions should strengthen their fraud controls by deploying fraud detection solutions across a variety of channels. Appropriate monitoring of both employee access logs and transactional activity can indicate employee fraudulent activity such as theft, unauthorized withdrawals and refunds, and more.

Credit unions may have internal controls and processes in place to monitor employees for unusual behavior. However, credit unions should consider how automated fraud detection solutions could proactively uncover unusual employee actions, ultimately reducing the risks of fraud and illicit activity.

Credit unions may have internal controls and processes in place to monitor employees for unusual behavior. However, credit unions should consider how automated fraud detection solutions could proactively uncover unusual employee actions, ultimately reducing the risks of fraud and illicit activity.

To learn more about Verafin’s fraud-fighting solution, register for this certified anti-money laundering specialist-accredited webinar, which will discuss the financial and reputational risks, as well as the potential compliance concerns of employee fraud. Learn about the tactics used by internal fraudsters and best practices to mitigate losses, including appropriate monitoring.

For more information on Verafin, contact NWCUA Strategic Partnerships Manager, Kaitlin Ramos. To learn more about Strategic Link’s partnership with Verafin, visit its webpage.